Editing Tariff (section)

=== Protection against dumping ===
States resorting to protectionism invoke unfair competition or dumping practices:
* Monetary manipulation: a currency undergoes a [[devaluation]] when monetary authorities decide to intervene in the foreign exchange market to lower the value of the currency against other currencies. This makes local products more competitive and imported products more expensive (Marshall Lerner Condition), increasing exports and decreasing imports, and thus improving the trade balance. Countries with a weak currency cause trade imbalances: they have large external surpluses while their competitors have large deficits.{{Citation needed|date=November 2024}} For example, in 2010, [[Paul Krugman]] wrote that China pursues a mercantilist and predatory policy, i.e., it keeps its currency undervalued to accumulate trade surpluses by using capital flow controls. The Chinese government sells [[renminbi]] and buys foreign currency to keep the renminbi low, giving the Chinese manufacturing sector a cost advantage over its competitors. China's surpluses drain US demand and slow economic recovery in other countries with which China trades. Krugman writes: "This is the most distorted exchange rate policy any great nation has ever followed". He notes that an undervalued renminbi is tantamount to imposing high tariffs or providing export subsidies. A cheaper currency improves employment and competitiveness because it makes imports more expensive while making domestic products more attractive.<ref>{{Cite news |last=Krugman |first=Paul |date=2010-03-14 |title=Taking On China |url=https://www.nytimes.com/2010/03/15/opinion/15krugman.html |access-date=2024-11-01 |work=[[The New York Times]]}}</ref>
* Tax dumping: some [[tax haven]] states have lower corporate and personal tax rates.{{Citation needed|date=November 2024}}
* [[Social dumping]]: when a state reduces social contributions or maintains very low social standards. For example, in several U.S. states, labor regulations are considerably lax and the laws that do exist are barely enforced (if at all). Thus employers can force vulnerable, migrant children into factory work for a fraction of the cost of legal adult labor. These children are often injured or killed.<ref>{{Cite news |last=Dreier |first=Hannah |date=2023-02-25 |title=Alone and Exploited, Migrant Children Work Brutal Jobs Across the U.S. |url=https://www.nytimes.com/2023/02/25/us/unaccompanied-migrant-child-workers-exploitation.html |access-date=2025-01-31 |work=[[The New York Times]]}}</ref>
* [[Environmental dumping]]: when environmental regulations are less stringent than elsewhere. For example, the [[EU Carbon Border Adjustment Mechanism|European Union starts its carbon border-adjustment mechanism]] in 2026 to even the playing field with firms not subject to European carbon pricing.